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Five Investor Relations Predictions for 2012

You don’t hear much about investor relations until something big happens. An IPO, a chatty CEO, earnings good or bad. Then the IRO is the most popular guy in the room.

With businesses reacting to the continuing tumult in world economies and IPOs in the works, we thought it would be a good time to turn an eye to IR in the year that was and the year that will be. In today’s guest post, Tom Johansmeyer does just that. Johansmeyer is group marketing director at Cross Border USA, which publishes IR Magazine, Corporate Secretary, andInside IPO, and a contributor at PRNewser’s sister site, SocialTimes. Please note: The opinions expressed in this article are entirely his own.

Click through for the predictions and an infographic with results from IR Magazine‘s “Global IR Practice Report.”

A year of market volatility, uncertainty in the IPO market, and increased competition for the IR officer’s time (and the CEO’s, for that matter) is leaving its mark on shareholder communications.

Looking backward, however, offers little unless it’s paired with a glance toward the future. So, with an eye toward the former and the other toward the latter, let’s see what 2012 holds for IR and financial PR.

1. Exporting the need for IR. Close to half the investors in Asian companies are located outside the region, according to “Global IR Practice Report 2011,” the latest from IR Magazine’s research arm, IR Insight. The largest portion is in North America, and Asian companies are investing in IR to court these investors. Asian companies with North American investment of above 30 percent, on average, have 14 percent larger IR teams and 18 percent larger budgets than those with North American investment of below 30 percent. Look for this trend to continue, especially as Asian companies see results from 2011 investments in 2012 and 2013.

2. Brazil will be like China, only different. Like companies in China (and the rest of Asia), those in Brazil are looking for foreign capital – and they’re getting it. To keep this going, Brazilian companies are committing to IR, like those in China. The Brazilians are doing it differently, however. According to the “Global IR Practice Report 2011,” they are eschewing large teams in favor of more money. The average IR budget in Brazil is just over $1.31 million, close to three times the size of the Chinese average (exclusive of annual reports and headcount). Money is meant to be productive: look for Brazilian companies to step up their efforts to attract foreign capital that obviously wants to go there.

3. CEOs will follow their IR spend. Sectors that invest in IR tend to get more C-suite/senior management involvement. Next year, look for the C-suite in basic materials companies to spend the most time on IR (it was 52 days last year), according to “Global IR Practice Report 2011.” The sector whose CEOs you won’t see as often: technology, media, and telecommunications.

4. Social media won’t be ready (yet). Some IR departments are using social media, but it still isn’t the norm. And 2012 probably won’t be the breakout year. From what I’ve seen and heard this year, the greatest barrier to consistent adoption is usefulness: we’re still waiting for IR’s “killer app.” Likely, it will be a practice rather than a piece of technology, and that practice will require the right underlying tools. The likes of StockTwits and cmp.ly will help set the stage, and other tools, from Slideshare to Tableau Software, are capable of greater impact than Facebook and Twitter. Once they decide on (or are introduced to) the right tools, then IR teams will be able to figure out the best way to use them. Adoption will follow.

5. Pitched battle for listings. More than 200 companies have filed for IPOs but haven’t pulled the trigger yet. That’s around $30 billion waiting to happen. These companies will have to choose the exchanges on which to list, and both NYSE and NASDAQ are looking for an edge, from free IR services, to unexpected advertising campaigns. The stakes are high in a tough market, giving both new listings and IR directors considering a switch solid positioning heading into the new year.

BONUS, the IPO market. Take a look at the next crop of “cool” public companies – the next wave of internet companies set to have IPOs in 2012. If 2011 is instructive, don’t expect IR to be a priority at newly public social media companies in 2012. The likes of Groupon, LinkedIn, and Zillow only offered small amounts of shares to the public, usually less than 10 percent of the company, at IPO. Rather than respond to roadshows, investors in these companies will look for short-term plans that can spell doom later. Also, it’s interesting that LinkedIn hired its first IR director several months after its IPO. Zynga, already has an IR job opening posted, but that isn’t enough to make it a trend.